Industrial companies, including Caterpillar Inc and 3M Co , credited demand from emerging markets like China for another round of stronger-than-expected quarterly results and improved 2010 forecasts.
Those global giants have invested heavily in recent years to expand in India, China, and other developing economies that are building up their infrastructure.
Their results speak to the strength of a global economic recovery, but also highlight a disconnect between slow-growing developed economies and the much faster recovery in emerging markets, whose recessions were typically shallower and shorter.
Thursday brought reminders. U.S. jobless claims rose more than expected; an index of leading indicators hinted at slow growth ahead; the supply of unsold U.S. homes rose; and Federal Reserve Chairman Ben Bernanke told the U.S. Congress the economy still needed a reasonable degree of stimulus.
Caterpillar, the world's largest maker of construction and mining equipment, cited price increases and said orders were outpacing shipments to dealers. The company also noted China's infrastructure spending and machinery sales to Latin America.
The company posted a second-quarter profit of $707 million, or $1.09 a share, beating forecasts by 24 cents a share, according to Thomson Reuters I/B/E/S. The midpoint of its improved earnings range was also above analyst estimates.
Caterpillar shares gained 2 percent to $68.19 in late morning trade. A broader barometer, the Standard & Poor's Cap Goods index <.GSPIC> was up 2.9 percent.
Caterpillar, known for its economic savvy, said a double-dip recession in Europe and North America remained a possibility.
Construction in developed countries is not doing well, particularly in the United States, said Longbow Research analyst Eli Lustgarten about Caterpillar's results.
Industrial companies, which generally do not sell directly to consumers, are benefiting from demand among businesses and governments, a point noted by shipper UPS, whose own profit almost doubled.
Clearly, this is a business-led recovery, UPS CEO Scott Davis said during a conference call with analysts. You'll see industrial production grow faster than GDP. That's driven by the manufacturing side.
Both Caterpillar and 3M said Asia-Pacific sales were up more than 40 percent, far ahead of the pace in North America or Europe. For a graphic, click http://link.reuters.com/cef98m.
Asia and Latin America... remain very strong, said George Buckley, 3M chief executive, on a conference call with investors, noting that Chinese revenue was up 51 percent for the quarter.
There was some mild softness in Spain and Greece, Buckley said, adding the company so no signs of a contagion spreading from those companies to the rest of Europe.
3M, like Caterpillar a Dow Jones industrial average <.DJI> component, rose 3.2 percent to $84.96 in early trading, part of a wider stock market rally.
3M which makes products ranging from Post-It notes to films used in flat-panel televisions, posted quarterly profit of $1.54 a share, beating estimates by 6 cents.
3M was among a number of companies that also expressed concern that the world economy is not entirely out of the woods, given sluggish growth in the United States and Europe, high unemployment, and Europe's sovereign debt concerns. Buckley warned 3M expected some slowing in the economy later this year.
There will be a period of slower growth in end markets later this year, Buckley said. This isn't a double-dip per se, it's just a soft spot and very normal as economic growth takes a breather for a while.
We continue to see encouraging signs across the global economy, Danaher Corp. Chief Executive Larry Culp said on the industrial conglomerate's conference call. Emerging markets were our best performers.
Danaher, whose products range from dental tools to water testing equipment, gets about a fifth of its sales from emerging markets, up from 16 percent three years ago. It also hiked its profit forecast but said sales growth will moderate in the remaining two quarters.
Shares of Danaher were down 1.9 percent after opening higher.
That note of caution was echoed by electrical products maker Cooper Industries Plc , which also beat estimates but said economic recovery remained uncertain.
Other companies reporting on Thursday included Thomas & Betts , Wesco International , and Hubbell Inc .
The results followed improved forecasts from multinational manufacturers like United Technologies , Textron and Eaton , that reported on Wednesday.
(Reporting by Nick Zieminski, additional reporting by Scott Malone in Boston; Editing by Derek Caney and Tim Dobbyn)